Most of the new tax laws take effect immediately. Do you think you have them figured out? Take this short quiz and find out. And, by all means, talk with your CPA or tax attorney.

1. The highest personal income tax bracket was:

  • • a. Lowered from 35% to 21%
  • • b. Lowered from 39.6% to 37%
  • • c. Kept the same
  • • d. Raised to 42% for incomes over $1 million
 

2. The tax on long-term capital gains was:

  • • a. Lowered to 10% for all income levels
  • • b. Lowered to 10% for assets owned longer than 5 years
  • • c. Kept the same
  • • d. Raised for profits on BitCoin trades

3. The standard deduction for MFJs (those who are married filing jointly) was:

  • • a. Lowered to $5,000
  • • b. Kept the same at $12,700
  • • c. Raised to $20,000
  • • d. Raised to $24,000 ($26,600 if both are at least at age 65)

4. If you are MFJ and itemize your deductions, how much can you deduct for state and local taxes:

  • • a. Unlimited – no change from 2017
  • • b. None – this deduction was eliminated
  • • c. A maximum of $10,000
  • • d. A maximum of $20,000 ($10,000 for each)

5. Regarding the Child Tax Credit for each child under age 17:

  • • a. The credit increased from $1,000 to $2,000 per child
  • • b. The qualifying income for MFJs rose from $110,000 to $400,000
  • • c. If the credit reduces your tax liability below $0, you could still claim a refund of $1,400
  • • d. All of the above

6. The interest on your mortgage had been deductible for the first $1,000,000 for MFJs. The new law lowers the limit to $750,000. However, the $1,000,000 ceiling will still apply to:

  • • a. Loans in existence prior to 2018
  • • b. Loans executed by 12/16/17 for homes that close before 4/1/18
  • • c. Refinances of loans in existence prior to 2018, as long as the principal is not increased
  • • d. All of the above

7. Starting in 2019, alimony payments mandated by new divorce agreements:

  • • a. Will not be deductible by the payer and will be taxable to the receiver.
  • • b. Will not be deductible by the payer and will be non-taxable to the receiver.
  • • c. Will be deductible by the payer and will be taxable to the receiver.
  • • d. Will be deductible by the payer and will be non-taxable to the receiver.

8. The unified federal gift and estate tax exemption for a married couple will:

  • • a. Stay about the same at $11.2 million
  • • b. Rise to $22.4 million—gradually from 2018 to 2025
  • • c. Rise to $22.4 million—immediately
  • • d. Be discontinued

9. The Alternative Minimum Tax (AMT):

  • • a. Was eliminated
  • • b. Had its exemption raised from $84,500 to $109,400 for MFJs
  • • c. Had its top rate reduced to 21%
  • • d. Gives taxpayers the option of choosing AMT if it’s lower than their regular tax

10. Which of the following deductions was not eliminated?

  • • a. Charitable donations
  • • b. Moving expenses
  • • c. Personal casualty and theft losses (except in a federally-declared disaster area)
  • • d. Tax preparation

Answers: 1b, 2c, 3d, 4c, 5d, 6d, 7b, 8c, 9b, 10a

Robert A. “Rocky” Mills is president of Westlake Investment Advisors in Westlake Village.  805-277-7300.  www.westlakeia.com.

He is a registered representative with and securities offered through LPL Financial, Member FINRA/SIPC. 

Investment advice offered through Westlake Investment Advisors, a registered investment advisor and separate entity from LPL Financial.